ARTHUR ANDERSEN AND THE TEMPLE OF DOOM
The accounting firm of Arthur Andersen was founded in 1913 as Andersen, DeLany, & Co. In 1918, the firm changed its name to Arthur Andersen & Co. Until 2002, Andersen was one of the world’s largest accounting and consulting firms. It was a “$9 billion ‘big five’ accounting firm with hundreds of partners and more than 28,000 U.S. employees,” and 85,000 global employees. For several decades, Andersen was the auditor for many of the world’s most reputable companies.
By the late 1990s, however, the SEC began to investigate a number of Andersen’s clients. Shortly before Enron’s collapse, two large Andersen clients – Waste Management and Sunbeam – were involved in notorious accounting scandals. In June 2001, Andersen settled a dispute with the SEC over Andersen’s auditing of Waste Management Corporation. Andersen paid $7 million – the largest
monetary settlement in the history of the SEC – to resolve the dispute, and Andersen was censured by the SEC. As part of the settlement, Andersen was permanently enjoined from violating federal securities laws; this injunction would later be used as a reason for indicting Andersen in the Enron scandal. Shortly after Enron’s collapse, two additional Andersen clients – WorldCom and Qwest – wereinvolved in historic accounting scandals.
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